Pay plus scheme, is it worth it?

miss_60

Does anyone know anything about reduced salary schemes and are they worth it?

Thanks

dunstonh

Are you talking about salary sacrifice?

This is where you take a pay cut but the employer increases your pension contributions therefore saving on NI. The idea being that the employer pays a little more into the pension so you share the savings.

miss_60

dunstonh wrote: »

Are you talking about salary sacrifice?

This is where you take a pay cut but the employer increases your pension contributions therefore saving on NI. The idea being that the employer pays a little more into the pension so you share the savings.

Yes, I'm confused as to whether I should opt for it or opt out. Any help would be great

Dick_here

miss_60 wrote: »

Yes, I'm confused as to whether I should opt for it or opt out. Any help would be great

Your take home pay will increase slightly if you do it. Need I go on ?

jamesd

Salary sacrifice schemes are a good deal for basic rate tax payers because you save the NI on the money being contributed. Can't tell how good a deal without knowing more of the details of how it works but you end up with free money in the form of higher take home pay or higher pension contributions due to that NI reduction.

Some employers will add all or part of their own reduced employer NI bill to the money.

Your salary for mortgage purposes may be reduced, some schemes will report the original salary. Pay stubs will always show the reduced one. Various state benefits will be calculated on the reduced salary figure.

If this is replacing a different scheme we'd need to know how this one compares to that one to know if you'll be better or worse off. Other terms might have changed.

Also helpful for higher rate tax payers because you get the tax relief each month instead of with a tax return.

miss_60

Thanks for the replies. Its given me a lot of food for thought. The organisation I work for hasn't informed any of us as to what % in addition to the pension contributions they are going to give us.